Impending tax changes threaten family farms

USAgNet - 03/15/2024

The Tax Cuts and Jobs Act, passed in 2017, has been crucial for the financial well-being of family farms across America. With provisions that lower taxes for both individuals and businesses, including specifically tailored benefits for pass-through entities such as farms and ranches, this legislation has significantly reduced financial pressures on the agricultural sector.

A staggering 98% of farms operate as pass-through businesses, benefiting from reduced tax brackets, an enhanced estate tax exemption, and the 199A qualified business income deduction, ensuring they remain competitive with corporate tax rates.

A looming deadline threatens to undo this progress. By 2025, if these provisions are not renewed, farmers could face a tax increase of over nine billion dollars in just a year due to heightened income and estate tax liabilities. This includes up to a 20% increase in tax liability for some farms solely from the expiration of the 199A deduction. Such financial strain could devastate the agricultural community, already navigating a complex and challenging economic landscape.

Farmers are urged to understand the specifics of how their taxes will be affected and to share their personal stories with elected officials. Advocacy through education and personal testimony is a powerful tool in ensuring that the needs of the farming community are heard and acted upon, aiming to secure the extension of these critical tax provisions beyond 2025. The potential financial impact underscores the importance of proactive measures to safeguard the future of family farms in America.

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